AI boom offsets impact of war, IMF: Global economic growth 3.0% this year, raises China’s growth forecast
The International Monetary Fund (IMF) maintains its basic assessment of global economic growth for this year, believing that the artificial intelligence boom has to some extent offset the negative impact of the Middle East war, but at the same time warns that risks are still skewed to the downside.
On Wednesday, the IMF released an update to its “World Economic Outlook” report. It forecasts that global economic growth in 2026 will be 3.0%, a slight decrease of 0.1 percentage points from its April forecast, and lower than the average growth rate of 3.5% over the past two years. At the same time, it raised its forecast for 2027 growth to 3.4%. On inflation, the IMF raised its forecast for global consumer price increases this year from 4.4% to 4.7%, and noted that the process of cooling inflation has stalled.
Meanwhile, the IMF raised its forecast for China's growth in 2026 by 0.2 percentage points to 4.6%, and for 2027 by 0.1 percentage points to 4.1%, citing faster-than-expected economic performance in the first quarter, preemptive infrastructure investment, growth in high-tech manufacturing, and increased exports as supporting factors.
The IMF summarized the core logic of the current global economic situation as a tug-of-war between two opposing and asymmetrical forces: the energy and supply chain shocks brought by the Middle East war, intertwined with the upward technological cycle represented by AI. However, the IMF also emphasized that expectations driven by AI may fail to materialize, which constitutes a significant downside risk. The IMF stated in the report:
"Overall, the global economy is currently showing better resilience against the shocks of war than previously expected."
Middle East Situation Constitutes Core Downside Risk
The IMF directly named the conflict in the Middle East as one of the main threats to the current global economy in its report and warned that the risk of escalation has become reality this week.
The report was finalized before the latest round of tensions between the US and Iran erupted, but the IMF still clearly pointed out that renewed escalation of conflict in the Middle East, further volatility in commodity prices, and further fragmentation of trade are core risk factors suppressing global growth.
The United States has carried out strikes on more than 80 targets in Iran. Trump stated that the temporary ceasefire agreement has ended for him, and on Wednesday said the US may launch further attacks, raising increased concerns in the market about the restart of full-scale war.
"There is a lot of uncertainty. Renewed escalation of conflict may reignite commodity price volatility, tighten financial conditions, shrink policy buffer space, and worsen food insecurity in low-income countries," said Petya Koeva Brooks, Deputy Director of IMF Research Department, at a press conference on Wednesday.
AI Drives Above-Expectation Growth in Asian Economies
The report listed the "positive surprises" from certain Asian economies as highlights in the global growth landscape. These economies are deeply embedded in the AI supply chain and have achieved growth against the trend despite dual disruptions in energy and trade.
South Korea stood out, with an annualized growth rate of 7.5% in the first quarter, more than four times the IMF’s April forecast of 1.8%. The IMF specifically noted that this achievement was realized despite “high dependence on Middle Eastern imported energy.”
Thailand, Malaysia, and Taiwan also benefited from explosive growth in demand for AI-related equipment, with growth rates exceeding previous expectations. Among them, Thailand's 2026 growth forecast was raised from 1.5% to 1.9%, due to emergency fiscal measures and strong performance in tech-related exports and investment; Malaysia benefited from the data center construction boom.
By contrast, the Middle East experienced the largest downgrade in growth forecasts. Saudi Arabia's 2026 growth forecast was cut by 1.4 percentage points to 1.7%, the largest reduction among all economies. The U.S. growth forecast remains unchanged at 2.3%.
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